What is pledge? A complete introduction to making passive income on the PoS chain

If you keep your coins in your wallet, they won't increase by themselves. Staking is to let these idle assets do some work: lock them into a chain that uses Proof of Stake (PoS), help it confirm transactions, maintain security, and then get a reward back.

This matter is not essentially a promise of income from financial products, but that you undertake part of the verification work for the network. Where do rewards come from? Part of it is the on-chain handling fee, and part of it is the new currency issued by the network. Therefore, the income will fluctuate depending on the network status, your pledged assets, and market conditions, and there is no guarantee.

Why some coins can be pledged while others cannot

The key lies in the consensus mechanism. Bitcoin uses Proof of Work (PoW) and relies on mining machines to compete for accounting rights. This kind of chain cannot be pledged. PoS has a different idea: don’t focus on computing power, but focus on how many coins you are willing to lock and for how long. PoS was proposed as an alternative to PoW in 2011, and now Ethereum, Solana, Cardano, Avalanche, Polkadot, Cosmos, etc. all run on PoS.

In the PoS network, the validator is responsible for checking transactions and packaging blocks. The network will select validators from among the pledgers, based on the number of pledges, the duration of the pledge, and sometimes random factors. The selected validators package the transactions into blocks, connect them to the chain, and then share the handling fees. Some chains will also issue additional new coins.

Four ways to participate, the thresholds are very different

Running your own node (solo staking) has the greatest control, but it requires technical skills. Improper configuration may trigger slashing, and part of the pledged assets will be deducted.

Exchange staking leaves the technical work to the platform, and you only deposit coins, which is sometimes called "staking as a service."

Delegated staking is to entrust coins to a trustworthy verifier or staking service provider. Some network wallets natively support this operation.

The staking pool pools everyone's coins together to increase the probability of being selected, and the rewards are divided according to the proportion of contribution. For users with small funds who cannot reach the minimum pledge threshold on their own, pools are a realistic option. However, the rates and safety practices of pools vary, so you need to do your homework before choosing one.

Liquid pledge: it can be moved even if it is locked

Ordinary pledges often require assets to be locked for a period of time, during which they cannot be moved. Liquidity staking wants to solve this contradiction: after staking, you get a token (LST) representing the pledged asset, which can be traded or used in DeFi, while still receiving staking rewards.

For example, if you stake ETH on Binance, you will get WBETH, and if you stake ETH on Lido, you will get stETH. There are also platforms that do not issue LST and do native liquidity staking directly on the chain, such as ADA on Cardano.

Re-pledge (restaking) is a newer way of playing: using the pledged assets to protect other protocols or services. EigenLayer pioneered this model on Ethereum, allowing pledged ETH to support multiple decentralized networks at the same time. Rewards can stack, and so can risks - you can be slashed by multiple protocols at the same time. This is an advanced operation, don't touch it until you understand the mechanism thoroughly.

Benefits and costs of staking

The benefits are straightforward: idle assets can generate additional tokens, which may become a source of passive income (but the income is not guaranteed); you are also helping the network maintain security and operation; some networks also give stakers voting rights, which can influence the direction of the project; compared to PoW mining, the energy consumption of PoS staking is much lower.

The cost is equally real. Market volatility is the first priority: the price of pledged assets plummets, and rewards may not be able to cover the shrinkage of principal at all. The risk of penalty comes from validators doing evil or nodes going offline, and part of the pledged funds will be deducted. The centralization risk is that if a few validators control a majority of the staked coins, the security and decentralization of the network will be threatened. Technical risks include lock-up periods, smart contract vulnerabilities, and software failures that prevent funds from being withdrawn. The third-party risk is that if you hand over the coins to the platform, the platform will be hacked, and the assets will be at stake. There is one more layer to the DeFi platform: permission management when authorizing wallet access.

What has been changed in the Ethereum Pectra upgrade?

The Pectra upgrade activated on May 7, 2025, raised the maximum pledge amount of a single validator from 32 ETH to 2,048 ETH, an increase of 64 times. In the past, institutions had to manage a large amount of ETH and had to run hundreds of 32 ETH validators, which was complicated and expensive; now one validator can hold more. By early 2026, more than 30% of the total ETH supply has been staked, indicating that participation is still rising after the upgrade.

If you want to start staking, follow this order

First choose a PoS chain, understand its staking requirements, lock-up period and expected rewards, and then decide whether to join. Then prepare a wallet that supports staking. Binance Web3 wallet, MetaMask, and TrustWallet are all common options. Finally, follow the network guidelines: run the node yourself, entrust it to a validator, or enter the pledge pool.

Keep in mind that the Web3 wallet is just the entry point to the staking service, it does not control the underlying protocol. Prioritize mature chains such as Ethereum and Solana, and do your own research before spending money.

How are rewards calculated? Each network is different, and it usually depends on four factors: the amount of your pledge, the duration of the pledge, the total amount of pledges across the entire network, network handling fees, and currency issuance rate. Some chains issue rewards at a fixed percentage, and rewards are often expressed in estimated annualized percentage (APR).

Can it be taken out? Generally yes, but the rules vary from platform to platform. If you withdraw early, you may lose part or all of the accumulated rewards. Ethereum’s 2023 Shanghai upgrade allows ETH pledges to be withdrawn, and pledgers can receive rewards and retrieve locked ETH at any time.

Finally, not all coins can be pledged. PoW chains like Bitcoin cannot do this; even in PoS networks, not every token supports staking, and different designs use different ways to incentivize participation.

What should be verified from the perspective of handling fees, VIP and rebates?

The pledge itself does not generate transaction fees, but your operations will: buy coins, transfer coins, redeem, and trade LST, and each step may be charged. If you are staking or buying and selling related tokens on an exchange, it is worth checking the maker/taker rates corresponding to your VIP level and whether the platform provides rebates. These costs are qualitative, and specific numbers vary by account and platform. Don’t use other people’s screenshots as your standard.

Reference: Binance Academy "What Is Crypto Staking and How Does It Work?" https://academy.binance.com/en/articles/what-is-staking

This article is for informational purposes only and does not constitute investment advice. Digital asset prices fluctuate greatly, and you may lose your entire investment. Please do your own research before staking and only invest money you can afford to lose.